Slowing rental growth is encouraging landlords to focus on the quality and resilience of their portfolios rather than expansion for its own sake, according to Hampshire Trust Bank.
The latest Office for National Statistics figures showed that average UK private rents increased by 3.3% in the 12 months to June, unchanged from the annual growth rate recorded in May.
The average monthly rent reached £1,388, rising to £1,446 in England, £1,012 in Scotland and £843 in Wales.
Meanwhile, annual UK house price growth slowed from a revised 3.9% in April to 2.7% in May. The average property was valued at £271,000, £7,000 higher than a year earlier.
Scotland recorded house price growth of 4.4%, followed by Wales at 4.2% and England at 2.3%. Northern Ireland recorded annual growth of 7.4% during the first quarter.
The North East was the strongest English region for both measures, recording annual house price growth of 5.9% and rental inflation of 6.3%. London house prices fell by 3.7%, while its rents increased by 2.2%.
“Maintaining a healthy supply of rental homes increasingly important.”
Alex Upton, managing director of specialist mortgages and bridging finance at Hampshire Trust Bank, said: “These rental figures reinforce what we’ve been seeing in other market data, including Rightmove.
“Average asking rents remain at record highs, but the pace of growth is very different to what we saw over the last couple of years. That’s creating a more balanced market, which tends to suit landlords taking a longer-term view rather than relying on rapid rental inflation.
“The Renters’ Rights Act is continuing to shape how landlords think about their portfolios, with smaller landlords increasingly considering their options while more professional investors continue to look for opportunities to strengthen and refine their portfolios. We’re having far fewer conversations centred around expansion for the sake of growth.
“The focus is much more on making sure every acquisition has a clear role within a portfolio, whether that’s strengthening income, improving resilience or creating longer-term value. That’s reflected in the continued appetite we’re seeing for specialist assets such as HMOs and semi-commercial property, where investors are looking to complement an existing portfolio rather than simply add to it.
“That makes maintaining a healthy supply of rental homes increasingly important. Analysis from TwentyEA suggests one in five rental properties have left the market over the past decade, despite continued tenant demand. Delivering a sufficient supply of rental homes needs to remain a priority if the market is to stay accessible for renters while continuing to attract long-term investment.”
